Efforts to Curtail Emissions Gain

More Firms Believe Emitting Gases Will Cost Money
By JEFFREY BALL

How Washington might crack down on global-warming emissions won't be clear until after the fall election. But this week will bring two signs that U.S companies believe change is on the way.
Monday, the nonprofit Carbon Disclosure Project will report that more multinational corporations believe emitting carbon dioxide and other greenhouse gases in the U.S. will soon start costing money.
On Thursday, the first program to slap a mandatory cap on greenhouse-gas emissions in the U.S. will swing into motion. Ten Northeastern states have joined together to limit emissions from power plants within their borders under a program called the Regional Greenhouse Gas Initiative.
Each year, those states will issue a limited number of permits allowing the power plants to emit carbon dioxide, the greenhouse gas that results from the burning of fuels such as coal and natural gas. The power plants will have to buy permits at a price determined by an auction. The first cap doesn't hit until next year, but the first auction for the permits will take place this week.
If U.S. companies are starting to see climate change as a serious business issue, though, they aren't sure how to respond.
Of the 321 companies in the Standard & Poor's 500-stock index that responded to the Carbon Disclosure Project's questionnaire this year, 81% said they see global warming as a risk, but 33% said they have come up with targets to curb their emissions.
Consider the lack of clarity in the Northeast emissions cap.
For now, it lacks much bite. The number of permits the 10 states plan to auction off for next year would allow more emissions -- not fewer -- than the plants are expected to emit. Planners assumed when they set the cap that emissions would have risen above it by the time it took effect, meaning the cap would force a cut. In fact, emissions have been dropping, in part because falling natural-gas prices have induced power plants to shift to that less-emitting fuel. So analysts expect low permit prices at this week's auction.
Even a small energy tax, however, could hurt Northeast power producers whose competitors in other states face no cap at all.
"We need to remove the imbalance as quickly as we can," said Donald McCloskey, director of environmental strategy and policy for Public Service Enterprise Group Inc., a New Jersey power company that will be hit by the cap. He added, "We need to transition quickly to a national program" to cap greenhouse-gas emissions. Why? To spread the pain.
Write to Jeffrey Ball at jeffrey.ball@wsj.com